The opinion of the court was delivered by: Larimer, Chief Judge.
Plaintiffs commenced this action under the Employee Retirement
Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq.,
seeking to recover certain retirement benefits allegedly due them
under the Akzo Nobel Retirement Account Plan ("the Plan"). The
original complaint contained six causes of action: two under
ERISA; three state-law claims for breach of contract, fraud, and
conspiracy to defraud; and a claim under the Racketeer Influenced
and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et
Defendants, Akzo Nobel, Inc. ("Akzo"), the Plan, by its
representative, Akzo Nobel Retirement Account Plan Pension
Committee ("the Committee"),*fn1 and Cargill, Inc., have moved
to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal
Rules of Civil Procedure. In addition to responding to those
motions, plaintiffs also filed an amended complaint. That
complaint dropped the fraud, conspiracy, and RICO claims.
Plaintiffs state that the amended complaint also "clarif[ies]
their ERISA and contract claims. . . ." Plaintiffs' Memorandum of
Law at 2. Defendants have filed reply briefs addressing these
The five plaintiffs in this action were all employees of Akzo
at its facility in Watkins Glen, New York as of April 1997, and
were fully vested members of the Plan. The Plan contained an
early-retirement provision giving participants the option of
retiring (albeit with reduced benefits) as early as age 55.
Plaintiffs were all within two years of reaching age 55 in April
In December 1996, Akzo entered into a purchase agreement with
Cargill, pursuant to which Cargill would acquire most of Akzo's
salt-producing business by April 1997, including the Watkins Glen
facility. The agreement also provided that Akzo would "retain the
assets, sponsorship, administration of and liability for all
benefit obligations pursuant to its benefit plans," and that Akzo
would "fulfill its obligations in accordance with [its] pension
plans without regard to whether or not an eligible retiree is
employed by Cargill." Amended Complaint Ex. A. The agreement
stated, "It is expressly understood and agreed that Cargill is
not assuming any obligations or liabilities under [Akzo's]
benefit plans." Id.
The purchase agreement further provided that Akzo was to
provide Cargill with a list of all its active employees, and that
prior to the closing, Cargill would identify those employees whom
it was not going to retain. Cargill promised, however, "to employ
substantially all" of the remaining employees, and "to maintain
substantially the same base salary levels and fringe benefit
structure (on an aggregate basis) for Transferred Employees
initially." Id. The agreement also stated that "[a]s to those
employees . . . to whom Cargill offers a substantially different
job or location and such offer is refused, Cargill will promptly
pay to [Akzo] the severance payments which would be made by
[Akzo] to such employees in the event of their termination as of
the Closing in accordance with [Akzo's] standard severance
Akzo transferred the Watkins Glen and other salt-producing
facilities to Cargill on April 25, 1997. None of the plaintiffs
had been selected by Cargill for termination prior to the
transfer. Under the terms of the purchase agreement, plaintiffs
at that point ceased being Akzo employees, and became employees
of Cargill instead. The complaint alleges that although
plaintiffs initially were kept on as Cargill employees, Cargill
terminated all of them within six months of the sale.
The amended complaint asserts three causes of action. The
first, which is brought under 29 U.S.C. § 1140 against the Akzo
defendants, alleges that prior to the execution of the purchase
agreement, Akzo and Cargill represented to plaintiffs that they
would suffer no substantial reduction in benefits as a result of
the sale of the Watkins Glen facility to Cargill. Plaintiffs also
allege that Akzo promised them that, as employees within two
years of early retirement age, they would be "bridged" to age 55.
In other words, Akzo promised plaintiffs that their right to
claim full early retirement benefits would not be affected by the
sale to Cargill.
Under the terms of the Plan, any employee age 55 or older could
claim early retirement benefits. The employee's pension benefit
would be reduced by .5% for each month by which the commencement
date of the pension preceded the employee's 62nd birthday.
Affidavit of A. James Edwards (Docket Item 16) Ex. O, § 4.03(b).
The Plan also provides that if a vested Plan member's employment
were terminated for any reason other than retirement or death,
the member would be eligible for a pension upon reaching his
normal retirement date (in most cases, age 65). Id. §
4.05(b)(i). The Plan states that
(ii) Notwithstanding the foregoing, a Member's
employment shall not be deemed terminated . . . if
(A) the Member's business unit, group or division is
sold; and (B) the Member accepts employment with the
purchaser or an affiliate of purchaser; and (C)
assets from the Trust Fund attributable to the Member
are transferred to a qualified retirement plan
maintained by purchaser or an affiliate of purchaser.
Section 4.05(c) provides that a terminated Plan member may also
elect . . . to have his Pension begin as of the first
day of any month following his 55th birthday and
prior to his Normal Retirement Date. In such event,
the Member's Pension shall be reduced by one-half of
one percent (0.5%) for each full month by which the
Benefit Commencement Date precedes the Member's
Normal Retirement Date.
The complaint alleges that the Akzo defendants have treated
plaintiffs as having been terminated by Akzo as of April 25,
1997, and has reduced their benefits with reference to the dates
of their 65th birthdays under § 4.05(c), rather than with
reference to the dates of their 62nd birthdays under § 4.03(b).
As a result, plaintiffs allege that they have lost 18% of the
value of their pension benefits. Plaintiffs allege that
similarly-situated employees at other Akzo ...